Monday, November 02, 2009

Active Management Loses in Risk Study -

Active Management Loses in Risk Study -
"The study by Morningstar Inc. found that, over the past three years, while about half of actively managed funds outperformed their respective Morningstar indexes -- which cover the nine different Morningstar investment styles -- only 37% did on a risk-, size- and style-adjusted basis. The numbers are similar for five and 10-year returns.

'It's not enough to beat an index in a way that [assumes more risk],' said Travis Pascavis, director of equity indexes at Morningstar. A riskier fund should provide greater returns, he added"
Gee, we just talked about this today in class.

HT to KimSnider the author of the Family CFO book we used last year in Finance 402.

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